Jobless Rate Drops; 112,000 Jobs Added
Fri Feb 6,10:57 AM ET
story.news.yahoo.com
By LEIGH STROPE, AP Labor Writer
WASHINGTON - The nation's unemployment rate dropped to 5.6
percent in January to the lowest level in more than two years as
companies added just 112,000 new jobs - fewer than expected but
enough to keep alive hope for a turnaround in the struggling job market.
The jobless rate fell 0.1 percentage point last
month to the lowest level since October
2001, when it was 5.4 percent, the Labor
Department (news - web sites) said Friday.
January's rate matched the 5.6 percent
posted in January 2002.
Employers added new jobs last month at a
pace not seen in three years. The last time
payrolls expanded more than 112,000 was in
December 2000, when companies added
124,000 positions.
But economists were disappointed, saying they had expected a larger
increase of 150,000 new jobs or more.
"It is not disastrous news, but it is definitely disappointing," said Bill
Cheney, chief economist at John Hancock Financial Services.
Added Ken Mayland, president of ClearView Economics: "This economy
under normal circumstances should be generating 200,000 to 300,000 a
month" in new jobs.
Analysts are looking for monthly payroll gains of 300,000 or more for
sustained job growth, and the economy remains far from that mark.
The report sent stock prices slightly higher on Wall Street in morning
trading.
Job growth is expected to be a key issue as November's presidential
election nears, and President Bush (news - web sites) could be
vulnerable. The economy has lost more than 2 million jobs since he took
office, giving him the worst job creation record of any president since
Herbert Hoover.
Still, January's hiring gains marked the fifth straight month of increases,
and followed a revised 16,000 new jobs added in December, better than
the 1,000 initially reported.
Friday's report "is good news for workers, and it's yet another sign that
the economy has turned the corner and the nation's job market is getting
stronger," said Labor Secretary Elaine Chao. "The economy has created
jobs in each of the last five months, with hundreds of thousands of
Americans finding new jobs."
Hiring by retailers and construction companies accounted for much of
the overall increase in payrolls. The nation's factories continued shedding
jobs, though at a slower pace than in previous months.
Some economists think hiring really is occurring in the economy, but it
is not being reflected in the Labor Department's monthly survey of
business payrolls. In the separate survey of households, employment
jumped by 496,000 last month.
The household survey counts self-employed workers and contract
workers, which are increasing. The survey of businesses does not.
"They're not recording the outside contractors - they're not reflecting
something that is tremendously fundamental now to the American
corporate scene, and that's outsourcing to outside contractors," Mayland
said.
The Labor Department's Bureau of Labor Statistics acknowledged the
continuing discrepancies, and said it is investigating.
Businesses are being squeezed by intense competition from other
countries, and are holding down costs by not hiring new, full-time
workers in the United States. Instead, they are outsourcing, working
their existing employees harder or shipping jobs overseas.
Friday's report showed that workers are indeed
putting in longer hours, with the average work week
climbing by 0.2 hour to 33.7 hours. The
manufacturing work week increased by 0.3 hour to
40.9 hours.
"Employers are working their workers longer hours
instead of hiring more bodies. For the economy, that
counts," Mayland said, noting that it produces more
income for consumers to spend, keeping the
economy afloat. "This is telling you the economy
really is growing very fast."
Construction companies helped boost overall hiring
gains, adding 24,000 new jobs last month. Buoyed
by continued strength in the housing market, the
sector has added 147,000 positions to its payrolls
since last March.
In the service sector, where most of the job growth is
taking place, retailers added 76,000 new jobs.
Garden supply and home building material stores
were particularly strong, also reflecting a strong
housing market.
About 8.3 million people remained unemployed in
the United States last month. |
